Expect Rising Interest Rates In 2021
2020 was chock full of historic events that left mortgage rates at record lows for much of the year. Going into 2021, the question everyone is asking is: will they stay low or increase as the year goes on? Here is what you need to know about what could happen in the coming months of 2021 for mortgage rates and the housing market.
Why Interest Rates Are So Low Right Now
With unprecedented circumstances stemming from last year’s pandemic, interest rates have fallen and stayed at record lows for much of the last calendar year, dipping and staying below 3% for much of it. The pandemic, massive job losses, economic shutdowns, and more factors have all contributed to historically low mortgage rates in America.
Will Interest Rates Go Up Soon?
Due to the ongoing pandemic and uncertainty in the vaccination timeline, mortgage rates remain fairly difficult to predict, but recent trends have seen them jump up a small percentage, from 2.92% to 2.96%. This is admittedly a very small percentage, but the question on everyone’s mind is: will they continue to stay low or start to go up as the new year goes on?
The short answer is that many industry experts predict sustained low interest rates throughout the remainder of 2021, though not as low as the historic rates of 2020. The Mortgage Bankers Association is predicting that rates will head back above 3% in 2021 thanks to many economic factors like COVID stimulus money and the expected progress in receiving the vaccines that will allow more people to get back to work.
Will Home Prices Also Increase?
Along with mortgage rates, home prices are also expected to rise going into 2021, 3.8% higher according to the Economic & Strategic Research Group at Fannie Mae. Those same researchers also expect overall housing activity to stay strong, but slow in pace from the rapidity of 2020.
Should You Take Advantage of Low Interest Rates Now?
As with everything financial, this depends on your own situation, income, and budget. However, if you are currently in the market for a home now, this would be the time to buy. Rates are likely going up in the next couple of coming months, so now would be a great time to move on that property while home prices and mortgage rates are low.
Now would also be a good time to take advantage of the low interest rates to refinance existing debts or mortgages. While you will likely have to pay a closing fee to refinance your mortgage, the lower interest rate will make up the cost in the long term.
To learn more about mortgage rates and the mortgage process, schedule an appointment with a residential real estate attorney at Lee Scott Perres, P.C.
